Analysis: Learning to learn from our mistakes with AML

Another apt quote, this time stemming from the anti-money laundering (AML) arena, comes from David Lewis, executive secretary of the U.K. Financial Action Task Force (FATF), who recently remarked, “We are all doing badly, some not as badly as others.” On that note: Is our collective AML failure part of a 1,000-step journey to great success, or are we just plain and simple failing?

A good analogy can be made between the fight against the coronavirus pandemic and the war on money laundering. Earlier this week, doctors and scientists made a significant breakthrough in the coronavirus battle when they discovered the low-cost steroid dexamethasone is quite effective in treating people infected with the virus. This discovery, which arose because of collaboration, cooperation, and a readiness to fail and to share that failure with others, could save many lives. From failures we learn what doesn’t work and become better equipped to find the solution.

Now let’s talk AML: When was the last time you determined to collaborate with a counterpart and share the story of a failed AML process? When was the last time you can recollect someone bringing a new idea, process, or concept to the world of AML? Struggling to find the answers? Don’t worry; you are not alone, and this single factor says so much about why those fighting COVID-19 succeed and those fighting money laundering fail.

The scientists and doctors could not have succeeded and made this discovery if they were not prepared to fail; if they did not try something new; if they did not collaborate; if they did not share their data, including data from failed processes and experiments. Imagine if scientists were stubborn, using the same drug time and again in different ways, doses, and delivery methods and refusing to accept its shortcomings. That seems to be the tired old mindset that’s failed us in the war on money laundering.

Now is the time for new thinking, new training, new ideas, and new data. Significantly, now is the time to have the courage to admit we have failed; unless we are prepared to admit our failings, we will continue to inhibit our ability to succeed. I invite you to think outside of the “Know Your Client” (KYC) box and radically change your AML practices. Challenge your vendors to bring you solutions, but be sure to tell them where you’ve spotted issues, rather than letting them point out the flaws. Vendors do not know your business as well as you do; you’ve pinpointed the risks and deficiencies, and you know what processes, systems, and controls won’t work. A good way to manage vendor relationships for a successful AML platform is to follow these guidelines:

• Do not allow vendors to provide answers if they have not had the intelligence and respect to ask you the question. No longer accept the same old failing solutions they previously gave. Demand change; demand something new, bold, and innovative.
• Think BIG. If necessary, press control, alt, delete, and start again. Be brave, but also be confident. People will try to champion their solutions; others will seek to defend their processes; and some will fight to preserve their kingdoms, their empires, their sales commissions; and more. Ask yourself if any of this is really working. Are we stopping money laundering? Are we engaged in a collaborative process to challenge the vendors; to apply new thinking; to be prepared to fail and to share experiences?
• Drive the necessary changes; do not be driven by others who present unnecessary and unhelpful changes. We want to make a difference, and we can only do this when we are prepared to be different. Never accept the line, “We have always done it that way.” It’s apparent that in the world of AML, the way we have been doing it has been wrong for far too long.
• Don’t process the same data in a different way. This is akin to administering a failing drug in a different way. Be bold: Go out and seek new, more effective data, and demand such data from your vendors.

I encourage you to join the revolution and start the journey to a brave new world of AML effectiveness—a world that harnesses our combined intelligent thinking; is a formidable obstacle to the launderers; and repels the damage so many of these evil criminals perpetrate.